Mississippi Attorney General Sues State Farm Over Katrina Claims

Published: June 12, 2007

Mississippi's attorney general, Jim Hood, sued State Farm Fire and Casualty on Monday, saying the company failed to honor an agreement for a mass settlement of claims over Hurricane Katrina damage.

In January, Mr. Hood agreed to drop State Farm from a lawsuit that his office filed against several insurance companies for refusing to cover damage to homes from Katrina's storm surge.

Mr. Hood took that step after State Farm settled with lawyers for homeowners on a $50 million payout to about 35,000 southern Mississippi policyholders who had not sued the company but could have their claims reopened.

But the pact fell apart after a federal judge refused to endorse it. Mr. Hood has said that he did not negotiate the terms of that settlement and that he shared the judge's concerns about the deal.

The state is seeking unspecified compensatory and punitive damages against State Farm, based in Bloomington, Ill., accusing it of breach of contract. Mr. Hood's office filed the suit Monday in Hinds County Circuit Court.

He did not rule out reopening a criminal investigation that he ended in January as part of the agreement. Mr. Hood's office was investigating allegations that the company had fraudulently denied policyholder claims after Katrina.

In a news conference Monday, Mr. Hood said the new lawsuit should help thousands of Gulf Coast policyholders, many of whom, he said, are still living in government-issued trailers because of State Farm's refusal to pay claims.

''They ought to be ashamed of treating their policyholders like this,'' he said.

A State Farm spokesman, Mike Fernandez, said Mr. Hood's lawsuit suggested he was ''more interested in making headlines in an election year than in making headway for the people of Mississippi.''

After the January settlement fell apart, State Farm reached a separate but similar deal with the state insurance commissioner, George Dale. That pact also calls for the company to reopen and possibly pay tens of thousands of claims, but it is not subject to judicial oversight.